Scotland Would Have To Win 4 High-Risk Bets For Successful Independence

REUTERS/Russell CheyneScotland’s First Minister Alex Salmond holds the referendum white paper on independence during its launch in Glasgow, Scotland November 26, 2013.

If you want to understand the stakes in the September 18 referendum on Scottish independence, you have to remember that Alex Salmond, the country’s first minister, is famous for his devotion to horseracing and his gambling tips.

On this occasion, he has come up with an accumulator bet.

Salmond needs to win four high-risk wagers to lead Scotland to independence and deliver on the prosperity he claims will come from separating from the UK. The danger for the people of Scotland is that they could find themselves in a weak state that is dependent on a UK that feels it owes them nothing.

Here are the four bets:

1) That Salmond can convince a majority of Scotland’s population to vote for independence on September 18, 2014.

2) That an independent Scotland can keep the British pound.

3) That Scotland can leave the UK but stay in the EU.

4) That Scotland can leave the UK but remain in NATO on its own terms.

Bet number 1: Salmond wants a majority to vote “Yes” to independence on September 18. With the pro-independence “Yes” campaign leading in the latest poll, Salmond’s gamble looks good. Until now the complacent consensus among British politicians has been that the “Yes” campaign would lose because it was trailing in almost every opinion poll since May 2011.

However, as Salmond knows, British opinion pollsters can get elections wrong. The opinion polls failed to predict that Salmond’s Scottish National Party (SNP) would win a majority in the 2011 Scottish parliament elections. The SNP’s unexpectedly large victory, a product of its efficient grass roots organisation, paved the way for the September 18 referendum.

In addition to the SNP party machine, Salmond is using the Scottish government to propagandize for independence. He has built an efficient media machine that smears his opponents, including on one occasion a single mother with a child suffering from cerebral palsy. The bloated Scottish government payroll plays in the nationalists’ favour and Scottish ministers have warned businesses not to oppose independence. Some local pro-independence groups have resorted to intimidation, with anti-English extremists joining in.

The anti-independence “No Thanks” campaign, by contrast, has no government resources at its disposal. Those advocating to keep Scotland in the UK have cobbled together an organisation with no track record of success. The leader of “No Thanks,” Alistair Darling, is a Labour politician best known for being Britain’s finance minister during the 2008 financial crisis.

REUTERS/Russell CheyneThe leader of Britain’s opposition Labour Party, Ed Miliband, arrives to speak and campaign ahead of the forthcoming Scottish vote for independence from the United Kingdom, in Blantyre, Scotland September 4, 2014.

Bet number 2: Salmond wants Scotland to separate from the UK but keep the British pound as its currency. The notion that Scotland could become independent but still use the pound is bizarre. The only independent countries that function with somebody else’s currency are failed economies such as El Salvador.

As importantly, the British government and opposition say they will not share the pound with an independent Scotland. Salmond’s response is that they are bluffing. He claims that Scotland actually owns pound: “it’s our pound and we’re keeping it.”

What is really happening here is that Salmond is preparing the way for a Scottish currency. Salmond has hinted as much by saying that using the pound is “transitional,” although without specifying to what. Having agitated for Scottish independence for over 30 years, and having studied the experience of other countries, Salmond has seen that most independent states issue their own money. A Scottish currency will also provide his government with control over monetary policy and will make running the budget easier.

Indeed, Salmond has actually made a strong argument for a Scottish currency. In an important speech in March 2014, Salmond said that “London is the dark star of the economy, inexorably sucking in resources, people and energy.” He’s right. Scotland is just 7.7% of the UK economy, while London accounts for 22.4% (England as a whole is 84.8% of the total). The London economy, with its exorbitant property prices and high wages, exerts greater influence over interest rates and the exchange rate than Scotland. Why then would Scotland want to use the currency of the “dark star”?

Bet number 3: Salmond wants Scotland to leave the UK but stay in the EU (which the UK joined in 1973). Numerous European politicians have said Scotland will have to apply to join the EU if it splits from the UK. No EU state wants to set a precedent that could lead to its own break up. Again, Salmond says they are bluffing.

The problem is that the nationalist attitude to the EU is malleable. Salmond conveniently forgets that in 1975 the SNP campaigned to take the UK out of the EU’s predecessor, the European Economic Community. The SNP has consistently argued that the British government in London routinely ignores Scotland’s needs, hence the need for independence. Yet an independent Scotland will supposedly be an EU member on precisely the terms that the British government has negotiated.

If this bet goes wrong, Scotland may have to leave the EU and negotiate to join from the outside. That would give the UK government tremendous influence in negotiations over using the pound and military bases in Scotland, to name just two issues.

REUTERS/David MoirBritain’s Queen Elizabeth walks past soldiers from the Royal Regiment of Scotland, during the Ceremony Of The Keys at Holyrood Palace in Edinburgh, Scotland July 2, 2012.

The SNP, which opposed NATO membership until 2012, says that Scotland will be part of the Atlantic alliance on two conditions. The first is that nuclear weapons leave the country — the UK’s nuclear submarines and their weapons are based in Scotland and US nuclear-armed vessels visit the country. The second is that an independent Scotland would “only take part in UN sanctioned operations.”

In practice, in NATO or neutral (the more likely outcome), an independent Scotland would have security forces so weak that it would depend on the UK. The nationalists claim that the Scottish armed forces would be small but capable, like those of the Nordic members of NATO, with defence assets claimed from current UK forces. This assumes an agreement on the division of UK assets and liabilities — an unlikely prospect given the nationalists’ determination to expel the UK nuclear deterrent.

The nationalists’ defence plans also ignore the fact that NATO’s Nordic members shelter under the U.S.-UK-French nuclear deterrent. The Nordic states, which feel particularly threatened by a resurgent Russia, rely on the U.S. and other NATO allies for many aspects of security, particularly intelligence and technology.

Alex Salmond may soon crown his 32 year political career by splitting Scotland from the UK, dividing mainland Britain for the first time in over 300 years. His accumulator bet is that Scotland can split from the UK but retain all the benefits of being in the UK. These odds may be too great even for Salmond. Instead, the result could be a separate Scotland independent largely in name, but in practice dependent on a resentful UK.

Andrew Apostolou is a writer on international affairs based in Washington D.C.